Power
How to get it simultaneously pursue a business model that promises scale economics while at the same time offering a product differentially attractive enough to pull in customers and gain relative share
Example
Netflix members enjoy original content, enabled by the company's economies of scale. Because Netflix can amortize content cost across 140 million members, it can invest significantly more than its smaller rivals.
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Scale economies
2
Network economies
Starting in 2008 with Xbox, Netflix built a device ecosystem. Today, nearly all TVs, similar to scale economies except that # of users DVD/Blu-Ray players, game systems, set-top boxes, and mobile devices are preis the goal rather than sales wired to stream Netflix.
3
Counter positioning
This "power" — an offer to customers that is impossible for competitors to match — is you pioneer a new, superior business model that rare. In 2004, however, Netflix advertised "No Late Fees." Blockbuster could not promises collateral damage for incumbents if respond as late fees generated nearly all of their profits. Blockbuster could not afford mimicked to make the same offer.
4
Switching costs
you first attain a customer base, meaning the same new-product requirements demanded of scale and network economies factor in here as well
5
Branding
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7
This hard-to-copy advantage exists when a customer invests so much in one product that it's hard to switch to another. To a small degree, Netflix customers don't turn to Amazon or Hulu because it's too much work to recreate profiles for each family member.
over and extensive period of time you make the Process power. Netflix has many unique, hard-to-copy processes. One example: they consistent creative choices which foster in the encrypt tens of thousands of titles each year at multiple bandwidths for thousands of customers mind an affinity that goes beyond the different hardware devices. products objective attributes The clearest example of this power is a patent. Another example is a close-knit team not available to other companies. The Netflix startup trio of Reed Hastings, Neil Hunt, and Patty McCord — who all worked together at a previous startup — is an example must secure rights to a valuable resource on of a captured resource. attractive terms. This often comes from having Cornered Resources developed that resource in the first place and Helmer's "7 Powers" book does not list this attribute, but I think it's essential. An then gaining ownership of it, the most common example: Netflix's personalization technology. Because Netflix knows the movie tastes avenue being a patent of 140M members, they can generate accurate forecasts of streaming hours for each potential title, and spend accordingly. They effectively "right-size" their investment in original content. you evolve a new complex process which renders itself inimitable within a reasonable Process power period and yet offers significant advantages over a longer period of time